BILL NUMBER: SB 974	CHAPTERED  10/10/99

	CHAPTER   672
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 6, 1999
	PASSED THE SENATE   SEPTEMBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 7, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 2, 1999
	AMENDED IN ASSEMBLY   JULY 15, 1999
	AMENDED IN SENATE   APRIL 27, 1999
	AMENDED IN SENATE   APRIL 12, 1999
	AMENDED IN SENATE   APRIL 5, 1999

INTRODUCED BY   Senator Speier

                        FEBRUARY 26, 1999

   An act to amend Sections 11713.11 and 11729 of, and to add Section
11713.14 to, the Vehicle Code, relating to vehicles.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 974, Speier.  Vehicle auction.
   (1) Existing law prohibits a licensed vehicle dealer, when
advertising one or more specific auction events, from advertising
that a vehicle will be auctioned to the public unless specified
information pertaining to the vehicle and the auction is disclosed in
the advertisement.  Existing law also prohibits the advertisement of
vehicles seized by public agencies or authorities unless specific
additional information is disclosed in the advertisement, and
provides that it is unlawful for an auctioning dealer to fail to
provide specified information on the day of the auction regarding a
vehicle seized by a public agency or authority.
   This bill would apply the above restrictions and prohibition to a
dealer when conducting an auction of vehicles to the public.
   The bill would additionally require disclosing in the
advertisement whether a buyer's fee, as defined, will be charged to a
purchaser, in addition to the accepted auction bid price, and, if
the fee is a set amount, the dollar amount of that fee, and if the
buyer's fee is not a set amount, the advertisement shall state the
formula or percentage used to calculate the fee.
   The bill would prohibit including in the total price of an
auctioned vehicle any costs to the purchaser at the completion of the
sale, except as specified.
   The bill would prohibit a holder of a dealer's license, when
conducting an auction, from charging a buyer's fee unless that dealer
delivers to any person permitted to submit bids, and at a time prior
to accepting bids from that person, a specified disclosure statement
that is signed by the person.
   The bill would specifically prohibit a dealer conducting an
auction from failing to comply with or violating certain provisions
of the Vehicle Code, Civil Code, Commercial Code, or Penal Code
pertaining to auctions or any law administered by the State Board of
Equalization relating to the auctioneering business.
   Because a violation of these provisions is a misdemeanor under
existing law, the bill would impose a state-mandated local program by
expanding the scope of that crime.
   The bill would grant a person who purchases a vehicle sold through
a dealer at an auction of vehicles open to the general public the
same rights and remedies against the dealer who conducts the auction
sale as if that dealer were an owner and seller of the auctioned
vehicle.  The bill would provide that the purchaser's rights or
remedies are in addition to any rights or remedies he or she may
otherwise have against the owner of a vehicle sold at a public auto
auction.  The bill would provide for indemnification of the dealer by
the consigning owner of a vehicle for any liability resulting from
misrepresentations or other misconduct by the consignor.  The bill
would prohibit waiving or modifying the purchaser's rights and
remedies set forth under this paragraph by an agreement or by
recharacterization of the transaction.
   (2) Existing law requires any dealer engaging in a consignment
with an owner, who is not licensed in a specified vehicle-related
occupation under the Vehicle Code, and the consignment is not
otherwise prohibited by that code, to execute a consignment agreement
as prescribed.
   This bill would exempt specified consignment agreement
requirements when a dealer conducts retail auction sales of vehicles
on behalf of a fleet owner, as defined.
  (3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature hereby finds and declares all of the
following:
   (a) Motor vehicles have been sold to dealers and other commercial
purchasers through wholesale auto auctions for many years.  In recent
years, motor vehicle auctions that are open to members of the
general public have become common.
   (b) Consumers that are induced through advertisement and other
means to attend and bid on vehicles offered for sale at public auto
auctions generally lack the sophistication of dealers and other
commercial purchasers who attend and purchase motor vehicles at
auctions.
   (c) Current Vehicle Code provisions governing the licensure of
persons that sell motor vehicles at auctions are primarily designed
to regulate wholesale motor vehicle auctions and are inadequate to
properly regulate persons that conduct public auto auctions or
protect consumers who purchase vehicles at public auto auctions.
   (d) It is the intent of the Legislature in enacting this act to
accomplish all of the following:
   (1) Ensure that any person that auctions motor vehicles at the
person's place of business for a commission, money, or other thing of
value is licensed as a dealer.
   (2) Strengthen the ability of the Department of Motor Vehicles to
properly regulate persons that conduct public auto auctions.
   (3) Protect unsophisticated consumers who are induced to attend
and bid on motor vehicles sold at public auto auctions.
  SEC. 2.  Section 11713.11 of the Vehicle Code is amended to read:
   11713.11.  No holder of a dealer's license shall do any of the
following when conducting an auction of vehicles to the public:
   (a) Advertise that a vehicle will be auctioned to the public
unless all of the following information is clearly and conspicuously
disclosed in the advertisement:
   (1) The date or the day of the week of the public auction, or if
subdivision (b) applies to the auction, the date of the public
auction.
   (2) The location of the public auction.
   (3) Whether a fee will be charged to attend the auction and the
amount of that fee.
   (4) The name and dealer number of the auctioning dealer.
   (5) Whether a buyer's fee will be charged to a purchaser, in
addition to the accepted auction bid price, and, if the fee is a set
amount, the dollar amount of that fee.  If the buyer's fee is not a
set amount, the advertisement shall state the formula or percentage
used to calculate the fee.
   (b) If vehicles seized by a federal, state, or local public agency
or authority are being advertised, advertise that a vehicle will be
auctioned to the public unless, in addition to the information
required by subdivision (a), the following information is clearly and
conspicuously disclosed in the advertisement:
   (1) A good faith estimate of the number of vehicles to be
auctioned at that date.
   (2) A good faith estimate of the number of vehicles seized by a
federal, state, or local public agency or authority to be auctioned
at that date.
   (c) Fail, on the day of auction, to identify each vehicle seized
by a federal, state, or local public agency or authority, either in a
printed catalog or orally, before bidding begins on the vehicle.
   (d) Include in the total price of an auctioned vehicle any costs
to the purchaser at the completion of the sale, except the accepted
auction bid price, taxes, vehicle registration fees, any charge for
emission testing, not to exceed fifty dollars ($50), plus the actual
fees charged to a consumer for a certificate pursuant to Section
44060 of the Health and Safety Code, any dealer document preparation
charge not exceeding forty-five dollars ($45), and any buyer's fee.
   (e) Charge a buyer's fee, unless the dealer conducting the auction
delivers to any person permitted to submit bids, and at a time prior
to accepting any bids from that person, a disclosure statement
required by this subdivision and signed by that person.  The
disclosure statement, if the buyer's fee is a set amount, shall
disclose the amount of the fee, or if the buyer's fee is not a set
amount, disclose the formula or percentage used to calculate the fee.
  The disclosure statement shall be on a separate 81/2 x 11 inch
sheet of paper.  Except for the information set forth in this
subdivision, the disclosure statement shall not contain any other
text, except as necessary to identify the dealer conducting the
auction sale and to disclose the amount, percentage, or formula used
to calculate the buyer's fee, and to provide for the date and the
person's acknowledgment of receipt.  The heading shall be printed in
no smaller than 24-point bold type and the text of the statement
shall be printed in no smaller than 12-point type and shall read
substantially as follows:


                            BUYER'S FEE REQUIRED

           A buyer's fee is an amount charged by the auctioning
      dealer for conducting the auction sale.  If your bid price
      is accepted as the winning bid on any vehicle, you will be
      charged a buyer's fee in addition to the accepted bid price.

           The buyer's fee that will be added to your accepted bid
      price is $ ___________________________.
                                     OR
           The buyer's fee that will be added to your accepted bid
      price will be calculated as follows (insert percentage or
      other formula for calculating the buyer's fee):

           The buyer's fee is part of the purchase price and is
      subject to sales tax.

      Date: ____________  Signature of Bidder _____________________


   (f) Fail to comply with or violate this chapter, Title 2.95
(commencing with Section 1812.600) of Part 4 of Division 3 of the
Civil Code, Section 2328 of the Commercial Code, or Section 535 of
the Penal Code, or any law administered by the State Board of
Equalization, relating to the auctioneering business, including, but
not limited to, sales and the transfer of title of goods.
   (g) For purposes of this section, a "buyer's fee" is any amount
that is in addition to the accepted auction bid price, taxes, vehicle
registration fees, certificate of compliance or noncompliance fee,
or any dealer document preparation charge, which is charged to a
purchaser by an auctioning dealer.
  SEC. 3.  Section 11713.14 is added to the Vehicle Code, to read:
   11713.14.  (a) Notwithstanding any other provision of law, a
person who purchases a vehicle that is sold through a dealer at an
auction of vehicles open to the general public shall have the same
rights and remedies against the dealer who conducts the auction sale
as if that dealer were the owner and seller of the auctioned vehicle.
  The purchaser's rights and remedies are in addition to any right or
remedy he or she may have against an owner of a vehicle sold at a
public auto auction.
   (b) If any claim or action is filed against a dealer pursuant to
subdivision (a) and the vehicle that is the subject of the claim or
action was owned by a person other than the dealer at the time of
sale by auction, the owner of the vehicle that consigned it to the
dealer shall indemnify the dealer for any liability resulting from
misrepresentations or other misconduct by the consignor.
   (c) A purchaser's rights and remedies under this section may not
be waived or modified by an agreement or by a recharacterization of
the sales transaction.
  SEC. 4.  Section 11729 of the Vehicle Code is amended to read:
   11729.  (a) Except as provided in subdivision (b), any dealer
engaging in a consignment with an owner not licensed as a dealer,
manufacturer, manufacturer branch, distributor, or a distributor
branch licensed under this code, and the consignment is not otherwise
prohibited by this code, shall execute a consignment agreement as
prescribed by Section 11730.  The failure of a dealer, when required
under this section, to complete and comply with the terms of the
prescribed consignment agreement for any vehicle which the dealer
agrees to accept on consignment, or to pay the agreed amount to the
consignor or his or her designee within 20 days after the date of
sale of the vehicle, is cause for suspending or revoking the license
of the dealer under paragraph (10) of subdivision (a) of Section
11705.
   (b) (1) A dealer conducting retail auction sales on behalf of a
fleet owner shall execute a consignment agreement applicable to all
vehicles consigned for sale during the term of the agreement which
contains, at a minimum, substantially all of the terms, phrases,
conditions, and disclosures required by Section 11730, except the
following are not required:
   (A) The description of a specific vehicle by year, make,
identification number, license, state, or mileage.
   (B) The information contained in paragraph (4) of subdivision (b)
of Section 11730.
   (2) If mutually agreeable, in lieu of the requirements of
paragraph (7) of subdivision (b) of Section 11730, the consignor may
provide the documents necessary to transfer the ownership of the
vehicle to the consignee prior to the auction being held.
   (3) For purposes of this subdivision, "fleet owner" is either of
the following:
   (A) A person who is the registered or legal owner of 25 or more
vehicles registered in this state and is the owner, as recorded in
the department's records, of the vehicles consigned for sale to the
dealer.
   (B) A bankruptcy trustee who owns or has legal control of the
vehicles consigned for sale to the dealer, government agency, or
financial institution.
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
